Best Execution and Order Placement Disclosure

Information about BlackRock's Best Execution and Order Placement Policy can be found in the Policy Disclosure tab. BlackRock's annual execution quality reports can be found in the Reports tab. Publication of this information is required under the European Markets in Financial Instruments Directive 2014/65/EU.

1. Background

The purpose of this document is to explain BlackRock’s Execution and Order Placement Policy (‘the Policy’), as required under the revised Markets in Financial Instruments Directive (MiFID II).

Under such rules, BlackRock is required to take all sufficient steps to obtain consistently over time (and not in relation to every single order) the best possible result when executing clients’ orders. This is an obligation referred to as “best execution”.

This Policy sets out how BlackRock complies with its obligation to act in the best interest of its clients when placing orders on behalf of its clients with other entities (such as brokers and dealers) for execution, to the extent that such obligation is identified as a separate obligation under applicable regulations. The Policy applies when executing client orders directly with an Execution Venue and/or when placing client orders, or transmitting client orders to, another entity for them to execute (collectively referred to as ‘execution’ throughout this policy).

All terms used in this document are defined in accordance with MiFID II. Additionally, a glossary of key terms can be found in Appendix 1.

BlackRock Fund Managers Limited (“BFM”), a UCITS Management Company and Alternative Investment Fund Manager located in the United Kingdom, (only those sections of the policy required by relevant regulation)

Orders executed for Professional Clients in relation to financial instruments defined by MIFID II.

3. BlackRock's Trade Execution Model

BlackRock operates a trade execution model that involves the centralization of most trading in specialized trading desks and the routing of orders typically to a central trading desk. Maintaining a centralized execution model allows BlackRock to enhance its control framework by creating a separation of duties between trading and portfolio management. It also allows BlackRock to optimize trade execution which is beneficial to BlackRock’s clients.

BlackRock’s centralized trading desks are separate from BlackRock’s portfolio management function, with certain exceptions due to the uniqueness of particular investment strategies and financial instruments, and are operated by BlackRock regulated entities in each region.

Dealing desks outside the European Economic Area (the “EEA”) follow similar policies, processes and procedures. However, the counterparties and trading methods used may vary from those used in the EEA given country specific practices.

BlackRock may match and cross orders received in opposite directions in the same financial instrument where permitted by applicable laws, regulations, and client agreements, and when BlackRock believes this is in the best interest of both clients. When this happens, it is done in accordance with BlackRock's Global Crossing Policy and related procedures and sections of the trading handbooks, which set out a number of provisions and controls designed to manage potential conflicts of interests between clients participating in such cross trades. In the EEA, BlackRock typically identifies a crossing opportunity and executes the cross trade on a trading venue which facilitates this type of trade.

In the EEA, BlackRock will typically identify a crossing opportunity and execute the cross trade on a trading venue which facilitates these types of trades.

4. Order Handling Protocol

BlackRock takes all sufficient steps to obtain the best possible result for its clients. In doing so, it must handle otherwise comparable orders for client accounts in the order in which they are received to provide fair and expeditious execution of all client orders, subject to the best interests of the client and instructions of the portfolio manager (“PM”).

Subject to local regulatory requirements, we may, when executing clients’ orders, aggregate those orders with those of one or more of BlackRock’s other clients. BlackRock’s Global Investment and Trading Allocation Policy sets out how BlackRock handles the aggregation and the fair allocation of aggregated orders and transactions over time.

5. Brokers/Counterparties & Execution Venues

In seeking best execution for its clients, BlackRock may use a variety of execution venues and methods, including agency and principal capacity in very limited circumstances (e.g. block dealing, RFQ platforms, swap execution facilities, and sponsored access to the order books of major execution venues).

BlackRock either will execute an order for a client on an execution venue, or with brokers acting as market makers, liquidity providers or in a principal capacity, or will place orders with brokers for them to execute on the execution venue.

A current list of Execution Venues and brokers used by BlackRock can be found in Appendix 2. and the same entity may, from time to time, either act as an Execution Venue or transmit BlackRock’s orders to an Execution Venue for execution.

With our clients’ consent and unless there is a regulatory obligation to trade certain financial instruments on Trading Venues, we may execute trades in financial instruments traded on Trading Venues outside such venues. This enables us to access a wider range of sources of liquidity and it is particularly desirable when trading illiquid financial instruments and/or large sizes, where we would likely aim to minimize the risk of information leakage or signalling to the market, to avoid a poor execution outcome. In these cases, we may find it more desirable to trade with a broker acting as a systematic internaliser or in a principal capacity.

Although there are benefits to executing trades outside of a trading venue, it should be noted that there is a risk that a broker will fail to meet its obligations in relation to the transaction (‘counterparty risk’). While contractual remedies would be available in these circumstances, protections which may be available when trading on venues (such as buy-in procedures) may not be available. Clients can request additional information from BlackRock about the consequences of transactions being executed outside a Trading Venue.

6. Broker/Counterparty Approval Process

All prospective and existing counterparties require the approval of BlackRock’s Counterparty and Concentration Risk Group (“CCRG”), who are part of BlackRock’s independent Risk & Quantitative Analysis team (“RQA”) and are responsible for implementing, updating, and maintaining counterparty credit policies and procedures (collectively the “RQA Counterparty Credit Policy”) designed to identify and evaluate counterparty credit risk and establish appropriate practices to manage this risk and maintain the overall quality of client and firm counterparty credit portfolios. All employees responsible for trade execution are required to comply with the RQA Counterparty Credit Policy.

For a new counterparty to be approved, a requesting PM or trader (or client relationship manager, when the request originates from a client) is required to submit a request to the CCRG. The CCRG will review relevant information to assess the financial strength of the proposed counterparty and appropriateness of counterparty exposures arising from the products traded.

7. Ongoing Monitoring of Brokers/Counterparties

CCRG maintains a list of approved counterparties and reviews the list on an on-going basis via a number of sources including audited and interim financial reports, rating agency reports and bulletins where available, various databases and news media and, if covered, output from the BlackRock Credit Research Group. Additionally, all trading counterparties undergo a cyclical formal review and renewal on a 12 to 18 month basis, which is documented in a form established and/or agreed by the Chief Counterparty Credit Officer.

8. Best Execution Obligation and Relevant Factors

BlackRock performs its best execution obligation to take all sufficient steps to obtain the best possible result for our clients when executing or placing, or transmitting, client orders by assessing the relative weight and importance of a number of execution factors and other relevant considerations under the particular circumstances.

A. Execution Factors

BlackRock consider any one or more of the following execution factors, as relevant:

The relative importance of the execution factors for individual orders varies depending on the characteristics of the order, the financial instrument, the Execution Venues available for execution or placement of that order and the specific market conditions at the time of the trade, such as signals (e.g., indications of interest or axes) about the availability of natural liquidity.

B. Execution Factors and Characteristics of the Order

When generating an order, BlackRock’s PMs specify instructions for the strategy they are pursuing on behalf of clients and for the nature of the order that they are generating. For example, their instructions may vary depending on whether the order was driven by cash inflows or outflows or by changes in the PM’s view regarding a particular financial instrument or type of exposure. Such instruction influences the prioritization of the execution factors by BlackRock’s traders. PMs’ instructions typically fall into one of the following categories:

Forward Benchmarks These orders target execution at a price specified by reference to a point in time in the future (such as “market on close” for stocks or WMR Benchmark Rate for currencies) when the calculation of the price will take place, often by way of an auction mechanism.

This type of benchmark is widely used by index sponsors for index calculation and it is also generally used by managers when executing orders for passive strategies in order to minimize their tracking error. Trading is typically concentrated around this point in time, unless traders believe that there will be insufficient liquidity in the auction or at the close of the market; in such cases traders might extend the trading window to execute outside of the auction while still seeking to manage tracking error appropriately.

Market-on-close orders typically prioritize the execution factors of likelihood and speed of execution at the required time.

Explicit Price Benchmarks These orders (such as limit or stop orders) specify a price point at which (or at a more advantageous price than which) to buy or sell the relevant amount of a financial instrument. An explicit price benchmark can be used by active investment strategies as a way to mitigate total expenses. It can also be used by passive strategies, which, for similar reasons, may choose to participate in end-of-day auctions subject to a limit.

Price dependent benchmarks inherently prioritize price as the primary execution factor for consideration. If the price benchmark can be satisfied for the order, traders prioritize additional factors that will most likely lead to complete execution of the order based on prevailing market conditions.

Best Efforts Benchmarks For orders that are made available to trade immediately, benchmarks such as “Arrival Price”, price at the time of execution and market price at the point in time when the PM assigns the order to the trading desk, are used whenever they are available and unless otherwise specified.

The PM may assign a higher degree of importance to one factor over another. For example, for orders where fulfilment of the entire trade is of highest importance, the likelihood of execution is prioritized. This is more often the case when executing orders for active strategies when the PM has a particularly strong view (whether as a result of fundamental analysis or strong quantitative signals) and tends to be less price sensitive to achieve fast execution.

Where the trader has full discretion in the execution of the order, all execution factors are considered and prioritization varies depending on prevailing market conditions, with total consideration and likelihood of execution typically having higher importance.

Contingent Orders Contingent orders consider the interdependency of two or more financial instruments on one another, such as the roll of futures contracts or the hedging of a credit instrument. In these cases, it is the collective benchmark of the package that drives the execution factors for consideration, rather than the application of the execution factors to the individual financial instruments that form part of the package or contingent order.

Similarly, traders may also need to consider the impact which an order imparts on the overall investment outcome. The execution of an order, which is part of larger basket of trades, may introduce portfolio effects which drive the consideration of execution factors, insofar as, for example, the respective timing of purchases and sales of financial instruments that are part of the basket needs to be calibrated, so as to minimize or eliminate unwanted market exposure to the portfolio. Further, investment objectives and constraints may limit PMs’ and traders’ ability to prioritize the execution factors.

C.Execution Factors and Characteristics of Financial Instruments

The hierarchy of execution factors that is expressed by a particular type of instruction is complemented by consideration of the characteristics of the financial instrument, as well as consideration of the size of the order, the market conditions at the time of execution of the order, and other relevant facts and circumstances, such that the execution strategy employed for a particular order may differ significantly from executions effected in the same class of financial instruments (and even in the same security) but for different trade sizes or in different market conditions.

Listed Financial Instruments Financial instruments listed on or executed on regulated markets or execution venues that display bids and offers, including both securities and listed derivatives, are typically subject to a high degree of price transparency, which typically limits the need for extensive price discovery. This allows traders to focus more on the execution mechanisms that are available from brokers and whether they can easily facilitate prompt execution while mitigating the impact on the market.

When the order size is considered large relative to the average daily trading volume of the relevant financial instrument, traders will have to manage the risk of signalling to the market the existence of a large trading interest to avoid the potential detrimental impact that this may have on the execution price. Traders may therefore prioritize the use of block trading channels that manage large order sizes.

For illiquid financial instruments (or financial instruments for which liquidity is not concentrated on regulated markets or venues that display bid and offers), the need for price discovery is evaluated against the risk that information leakage might impact the overall execution outcome negatively, which may result in traders requesting quotes from market participants known to offer liquidity in the specific financial instrument to be traded.

Over the Counter (‘OTC’) Financial InstrumentsOTC financial instruments that trade in a decentralized market, including both unlisted securities and OTC derivatives, have varying degrees of price transparency. For liquid financial instruments within a reasonable range of tradeable market sizes, traders prioritize trading venues that facilitate price discovery through requests for quotes from multiple market participants. Alternatively, traders may rely on the pricing information contained in alternative pricing sources when selecting a single broker to request a quote for the relevant financial instrument.

For less liquid financial instruments or when the order size is considered large, in order to minimize the potential market impact, traders may choose their counterparty based on its perceived ability to manage large orders in a way that minimizes information leakage, signalling to the market, and market impact.

For the execution of trades in illiquid financial instruments, brokers who trade in the same securities or securities with similar characteristics may be prioritized.

For more complex OTC products, where prices are not directly observable (e.g convertible bonds or option packages), traders use available internal and external data or tools to assess the fairness of price, and the expected cost of trading, as accurately as possible under such circumstances.

All general PM instructions and considerations based on the nature of the order apply to trades in listed instruments. Orders for listed instruments with forward benchmarks typically are executed in the closing auction for markets where such a mechanism exists. If there is not sufficient liquidity in the auction, then trading might also take place earlier or later to mitigate market impact.

For orders with a best efforts benchmark, BlackRock typically choose an execution method most suitable for balancing price and likelihood of execution.

Where the size of an order is significant relative to available liquidity in the secondary market, traders may prioritize execution channels which provide supplemental or surrogate sources of liquidity, such as broker capital or primary ETP markets.

Futures and Listed Options

Interest Rate Derivatives – Listed Futures & Options

Credit Derivatives – Listed Futures & Options

Equity Derivatives – Listed Futures & Options

Commodities Derivatives – Listed Futures & Options

All general PM instructions and considerations based on the nature of the order apply to trades in futures and listed options.

Orders for listed instruments with forward benchmarks typically are executed in the closing auction for markets where such a mechanism exists. If there is not sufficient liquidity in the auction, then trading might also take place earlier or later to mitigate market impact.

For orders with a best efforts benchmark, BlackRock typically choose an execution method most suitable for balancing price and likelihood of execution.

Where the size of an order is significant relative to available liquidity in the secondary market, traders may prioritize execution channels which provide supplemental or surrogate sources of liquidity, such as broker capital markets.

For liquid options within a reasonable range of tradeable market sizes, traders will prioritize trading platforms that facilitate price discovery through requests for quotes from multiple market participants.

Debt Instruments

Bonds

Structured Finance Instruments

While some debt instruments are listed, they are commonly traded in a decentralized OTC manner.

All general PM instructions and considerations based on the nature of the order apply to trades in debt instruments.

Orders for debt instruments with forward benchmarks typically are executed around the point in time specified by the PM, since there isn’t an official closing auction in these markets. If sufficient liquidity is not available at that time, then trading might also take place earlier or later to mitigate market impact.

For orders with a best efforts benchmark, BlackRock applies a variety of execution methods most suitable for balancing price and the impact of order size on transaction costs.

Money Market Instruments

The execution factors and criteria that BlackRock takes into account for money market instruments reflect the nature of these orders. Similar to the general considerations, the orders are primarily characterized by PM motivation.

For overnight funding transactions, such as time deposits, completion of the order is of highest importance. As such, likelihood of execution is prioritized, with consideration given to the number of available counterparties and capacity.

For orders where completion is at the trader’s discretion, price and the impact of order size on transaction costs are considered. (See Best Efforts Benchmarks)

OTC Derivatives

Equity Derivatives

Credit Derivatives

Interest Rate Derivatives

Currency Derivatives

Commodity Derivatives

Securitized Derivatives

While most derivative instruments are primarily traded in a decentralized OTC manner, some products may be admitted to trading on a trading venue.

All general PM instructions and considerations based on the nature of the order apply to trades in derivative instruments.

Orders for derivative instruments with forward benchmarks typically are executed around the point in time specified by the PM, because there is not an official closing mechanism in these markets. If sufficient liquidity is not available, then trading might also take place earlier or later to mitigate market impact.

For orders with a best efforts benchmark, BlackRock applies a variety of execution methods suitable for balancing price and the impact of order size on transaction costs. Further, due to the OTC nature of these instruments, there is a varying degree of price transparency, so traders also need to reduce information leakage, signalling and market impact.

Different regulations could mandate that some of these instruments are required to be traded on venue.

Other Structured Financial Instruments

From time to time, BlackRock may decide to enter into bespoke structured transactions. When it does so, it seeks to gather structuring proposals and pricing from one or more brokers, taking into account their expertise and subject to BlackRock’s requirement to diversify its counterparty exposure. Typically, such transactions comprise different components and, to satisfy itself that the price proposed by the counterparty is fair, BlackRock may request quotes from more than one counterparty before entering into the transaction or, alternatively, may break the transactions down into their individual components and analyse the implied pricing of each component based on historical or empirical data.

Securities Finance Transactions

Securities Lending

Repurchase Agreements

Physical & Synthetic Securities Financing

For securities finance transactions including securities lending, repurchase agreements and physical/synthetic financing, the execution factors and criteria that BlackRock takes into account include the supply and demand characteristics for the securities in question and additional considerations such as:

current market pricing to lend or finance the specific security

price discovery will follow a similar process to other OTC markets in that traders will prioritize Trading Venues that facilitate ‘requests for price and capacity’ from multiple market participants

liquidity of the lending, financing and cash market for the relevant security

current utilisation/availability of the security and the size of supply or demand relative to the lending or financing market will be considered when determining the likelihood of execution

the overall utilization of a broker’s balance sheet

other factors that may include, but are not limited to:

collateral type proposed (e.g., cash or non-cash)

proposed duration of the securities finance transaction

transaction costs levied by providers such as custodians, triparty banks, or broker; and

9. Broker/Counterparty & Execution Venue Selection

General Considerations

After prioritizing the execution factors based on the characteristics of the order and the financial instruments, if BlackRock has a choice of a number of brokers or Execution Venues that could equally fulfil a given order, it selects the individual broker or Execution Venue by considering further qualitative and quantitative factors. These further factors are often specific to individual financial instruments or classes of financial instruments as the applicable market structure determines the instrument’s liquidity. These additional factors include, but are not limited to:

availability of algorithms and ability to adapt products to BlackRock’s workflows

access to liquidity

OTC InstrumentsVenue considerations for OTC instruments vary depending on overall liquidity and the manner in which they trade:

for liquid OTC instruments that trade electronically consideration is given to the type, quality and breadth of Execution Venues; and

for instruments that do no trade electronically, consideration is given to venue liquidity, coverage of instruments and sectors and competitive quoting

Securities Finance TransactionsLending and Financing transact only with approved counterparties, up to any applicable credit limit determined by Blackrock’s RQA Team.

As securities lending does not involve the execution of orders to trade but rather the allocation of loan requests submitted by brokers, BlackRock agrees and settles a requested trade provided the broker has been approved, the value of the proposed transaction does not exceed the aggregate value of loans permitted, and the other execution factor considerations have been met.

product availability, as some issuers will limit the size of issuances available for certain maturities.

Available venues are limited by the issuer in certain instances, such as asset backed commercial paper. Where certain financial instruments are only available directly from the issuer or a small group of brokers, this informs the selection of the Execution Venue.

11. Services and Benefits Received from Execution Venues

BlackRock from time to time may receive the following services and/or benefits from brokers and Execution Venues:

information or documentation relating to financial instruments or investment services that is generic in nature or personalised to reflect BlackRock’s circumstances;

issuer commissioned research coverage;

participation in conferences, seminars or trading events on the benefits and features of specific financial instruments or investment services;

hospitality of de minimis value during meetings or those events specified in clause iii above;

connected research on an issuer in the context of an issuer capital raising;

research provided for a trial period; and

such other services and/or benefits that can be considered minor non-monetary benefits under Applicable Law from time to time.

12. Receiving a Specific Client Instruction

In instances where a client has provided a specific order instruction, BlackRock will be deemed to have complied with its best execution obligation for the specific part of the trade to which the instruction relates. However, BlackRock will continue to apply this policy to those aspects of the order not covered by the specific instruction.

13. Directed Brokerage

From time to time, a client may instruct BlackRock to execute its trades with a particular counterparty or venue or otherwise place limitations on BlackRock’s discretion to determine counterparty, venue or commission. Directed brokerage arrangements typically are documented in a client’s Investment Management Agreement with BlackRock, or a side letter and may involve the receipt of brokerage commissions from transactions for the client in exchange for the provision of services directly to the client or the payment of certain expenses on behalf of the client, subject to any regional regulations governing permitted use of commissions. The execution timing, levels and/or trading costs may be compromised when entering into directed brokerage arrangements.

Alternatively, a client may direct BlackRock to execute a certain proportion of their overall trading to a broker that meets specific criteria set by the client (e.g., an emerging broker). Traders use their judgement to decide which trades to execute with such directed brokers and balance clients’ directed brokerage requirements with trying to obtain the best overall result for the client.

Implications on Commission Rates.

In directed brokerage arrangements, BlackRock may not be in a position to freely negotiate commission rates or spreads, obtain volume discounts on aggregated orders or select counterparties on the basis of best price and execution. As a result, directed brokerage transactions may result in higher commissions, greater spreads, or less favourable execution, than would normally be the case if BlackRock were able to choose the broker.

In certain instances where BlackRock is instructed by a client to execute transactions with a specific broker or dealer, BlackRock may “step out” part of an aggregated order in order to have the directed broker or dealer clear and settle that portion of the trade.

14. Monitoring

BlackRock performs multiple types of monitoring to maintain order execution arrangements that remain suitable for the purpose of delivering the best possible results for clients consistently over time and to assess our best execution obligation. The key types of monitoring include transaction cost analysis (TCA), compliance monitoring and senior management oversight in governance committees. The specific scope and content vary depending on the data that is available, for the relevant asset class, in the market. As new data sources and pricing models become available they are assessed for potential inclusion in our monitoring.

BlackRock’s TCA platform quantifies the full cost of trading, which includes cost contributions from commissions, spreads, market impact, and the opportunity costs from not executing a trade. The total impact from order handling and routing decisions is captured by these measures. Transactions are evaluated against a range of pre-trade, intra-day, and post-trade benchmarks to holistically assess trading performance against the market context. Trading results can be examined in the TCA tool along a broad array of attributes, such as by counterparty, trader, benchmark, or market, allowing for focused evaluation of each category.

Governance BlackRock performs reviews of its trading activity in regular governance committees which review execution quality, the effectiveness of this policy and execution arrangements. Governance committees are charged with making enhancements to BlackRock’s execution arrangements and policy, where deemed appropriate. The oversight committees are global in nature and cover all asset classes. Trading, Investments, Risk, and Legal & Compliance are represented on each Committee.

Compliance MonitoringThe Global Transaction Surveillance and Forensic Testing team, a part of the Regulatory Risk and Review team within Legal and Compliance, is responsible for ongoing post trade second line monitoring. The team conducts ongoing, routine, sample based and risk based tests for adherence to the policy, currently with a focus on pricing, timeliness of execution and broker selection criteria.

15. Periodic Review of Policy and Order Execution Arrangements

BlackRock is required, under applicable regulations, to review this policy and its order execution arrangements at least on an annual basis for its adequacy and the effectiveness of its implementation. It is also required to review this policy whenever a material change occurs that affects BlackRock’s ability to continue to obtain the best possible result for its clients.

A material change means a significant event of an internal or external nature, that could materially impact the relevant best execution factors listed in this policy or the execution venues or entities to which BlackRock transmits client orders for execution, on which BlackRock places significant reliance in meeting its overarching best execution requirement. Any of the following events may, but will not necessarily in all circumstances, amount to such a material change: regulatory changes that materially alter the market structure for certain classes of financial instruments or that otherwise require changes to BlackRock’s arrangements and processes; BlackRock’s observation of a significant and consistent deterioration in the liquidity offered and in the quality of execution achieved on a trading venue or from a broker or dealer.

During the periodic review, BlackRock will consider whether it could consistently obtain better execution results if it were to:

include additional or different Execution Venues or entities;

remove any existing Execution Venues or entities;

assign a different relative importance to the best execution factors;

or modify any other aspects of this policy and/or execution arrangements.

The effectiveness of BlackRock’s order execution arrangements is tested and monitored by Trading and any identified deficiencies are escalated to the relevant Oversight Committees. As new data sources and pricing models become available they are assessed for potential inclusion in our monitoring. BlackRock tests both the effectiveness of the execution venues that it selects when executing client orders and the execution quality of the entities where it places orders for clients.

16. Conflicts of Interest

Conflicts of interest are a key regulatory risk for any asset manager. The Global Conflicts of Interest Policy governs BlackRock’s responsibility to place its clients’ interests first and identify and manage any conflicts of interest inherent in BlackRock’s business. The policy requires that BlackRock employees report any actual or potential conflicts of interest to their Supervisor and to Legal & Compliance. Amongst other things the policy also requires employees to act solely in the best interests of clients and avoid or otherwise mitigate the conflict of interest, which may involve curtailing or terminating an activity or seeking client consent.

17. Information Provided to Clients

In accordance with relevant regulatory requirements, BlackRock is required to disclose certain information to clients regarding this policy, including appropriate information about BlackRock and its services, and in some jurisdictions, additional information about the consequences of executing outside a trading venue and the entities chosen for execution. Upon a reasonable request from a client, BlackRock shall provide clients or potential clients with information about entities where the orders are transmitted or placed for execution.

In addition, in EMEA BlackRock has an obligation to publish on a website annual reports on the quality of execution attained, separating reports for

trades executed by Blackrock,

orders placed by BlackRock with third parties for execution and

trades in securities financing transaction, for each of the 22 classes of financial instruments.

Appendix 1 – Glossary of Terms

Execution Venue

A Regulated Market, a Multilateral Trading Facility (MTF), an Organised Trading Facility (OTF), a Systematic Internaliser, or a Market Maker or other Liquidity Provider or an entity that performs a similar function in a third country to the functions performed by any of the foregoing.

Multilateral System

Any system or facility in which multiple third-party buying and selling trading interests in financial instruments are able to interact in the system.

Regulated Market

A multilateral system operated and/or managed by a market operator, which brings together or facilitates the bringing together of multiple third-party buying and selling interests in financial instruments – in the system and in accordance with its non-discretionary rules – in a way that results in a contract, in respect of the financial instruments admitted to trading under its rules and/or systems, and which is authorised and functions regularly and in accordance with Title III of MIFID II.

Multilateral Trading Facility (MTF)

A multilateral system, operated by an investment firm or a market operator, which brings together multiple third-party buying and selling interests in financial instruments – in the system and in accordance with non-discretionary rules – in a way that results in a contract in accordance with Title II of MIFID II.

Organised Trading Facility

A multilateral system which is not a regulated market or an MTF and in which multiple third-party buying and selling interests in bonds, structured finance products, emission allowances or derivatives are able to interact in the system in a way that results in a contract in accordance with Title II of MIFID II.

Trading Venue

A regulated market, an MTF or an OTF

Systematic Internaliser

A investment firm which, on an organised, frequent systematic and substantial basis, deals on own account when executing client orders outside a regulated market, an MTF or an OTF without operating a multilateral system.

Market Maker

A person who holds himself out on the financial markets on continuous basis as being willing to deal on own account by buying and selling financial instruments against the person’s proprietary capital at prices defined by that person.

Other Liquidity Provider

A firm that hold themselves out as being willing to deal on own account, and which provide liquidity as part of their normal business activity, whether or not they have formal agreements in place or commit to providing liquidity on a continuous basis

Professional Client

A client who possess the experience, knowledge and expertise to make its own investment decisions and properly assess the risks that it incurs. A client meeting the criteria laid out in Annex II of MIFID II is considered to be a Professional Client.

Bid/Ask Spread

The difference between the market price quotations, for buying and for selling particular securities.

Liquidity

1) The degree to which an asset or security can be bought or sold in the market without affecting the asset's price. Liquidity is characterised by a high level of trading activity. 2) The ability to convert an asset to cash quickly. Investing in illiquid assets is riskier because there might not be a way for you to get your money out of the investment. Examples of assets with good liquidity include blue chip common stock and those assets in the money market. A fund with good liquidity would be characterised by having enough units outstanding to allow large transactions without a substantial change in price.

Market Impact

The effect a market participant has when it buys or sells an asset and the extent to which the buy or sell moves the price against the buyer or seller.

Programme Trades

Trades for a basket of securities placed through a single broker and priced as a portfolio and not by reference to the individual constituents of the basked.

Securities Lending

The process by which securities are transferred to a counterparty, subject to an obligation for return of the equivalent securities at a future date. The lender is remunerated by way of a fee.

Volatility

The relative rate at which the price of a security or fund moves up and down. Volatility is found by calculating the annualised standard deviation of daily change in price. If the price of a stock moves up and down rapidly over short time periods, it has high volatility. If the price almost never changes, it has low volatility.

Commission Recapture

The process whereby a client directs a manager to place trades for his account through a specific broker, in exchange for which the client will receive a rebate of a portion of the total commission in addition to execution services. The arrangement can be managed by a third party, such as an investment consultant, or managed by the client’s investment manager.

Crossing Network

An electronic execution venue that enables the matching of orders directly between buyers and sellers. Commissions are typically lower while market impact and bid/ask spreads are removed altogether. Liquidity is often a constraint to order completion.

Direct Market Access (“DMA”)

Direct access to the market floor by managers who wish to deal anonymously in the market, without the use of execution services provided by a broker.

Electronic Communication Network (“ECNs”)

An electronic system that connects major brokerages and individual traders so that they can trade financial products outside of stock exchanges, directly between themselves. The primary products that are traded on ECNs are stocks and currencies.

Execution Services

Those services related to trade execution that meet the criteria laid down by the FCA for payment out of commission.

Appendix 2 – List of Execution Venues and Brokers (as of December 2018)

Arrangements may vary depending on contractual arrangements with clients